First Cash, Ltd. v. JQ-Parkdale LLC

Opinion

ACCEPTED

13-16-00099-CV

THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS

12/30/2016 10:09:11 PM

Dorian E. Ramirez

CLERK

NO. 13-16-00099-CV

________________________________________________________

FILED IN

IN THE COURT OF APPEALS 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, TEXAS FOR THE THIRTEENTH DISTRICT 1/3/2017 8:00:00 AM AT CORPUS CHRISTI/EDINBURG, TEXAS DORIAN E. RAMIREZ

________________________________________________________

Clerk

FIRST CASH, LTD

VS

JQ-PARKDALE, LLC, H&JQ PD, LLC, W-SB STAPLES/SPID LLC, R-SB STAPLES/SPID, LLC, PARKDALE INCOME PARTNERS, LP, & CAPITOL AREA RETAIL DEVELOPMENT, II, INC.

________________________________________________________

AN APPEAL FROM THE 319th COURT OF NUECES COUNTY, TEXAS

________________________________________________________

CROSS-APPELLEES’ BRIEF

FOR JQ-PARKDALE, LLC, H&JQ PD, LLC, W-SB STAPLES/SPID LLC, and R-SB STAPLES/SPID, LLC

________________________________________________________

John Runde

Tx Bar # 24093084

Eric Stewart

Tx Bar # 24058133

HUSEMAN & STEWART

615 N. Upper Broadway #2000 Corpus Christi, Tx 78401

Tel: 361.883.3563

ORAL ARGUMENT IS RE- Fax: 361.883.0210 QUESTED JRunde@HusemanStewart.com EStewart@HusemanStewart.com

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NAMES AND ADDRESSES OF ALL PARTIES

APPELLANT/CROSS-AP- First Cash, ltd. PELLEE: TRIAL COUNSEL: Mr. Patrick L. Gaas Mr. Paul Catalano

Mr. Edward S. Hubbard

COATS ROSE YALE RYMAN & LEE, PC 3 East Greenway Plaza, Suite 2000 Houston, TX 77046

Email: pgaas@coatsrose.com Email: pcatalano@coatsrose.com Email: ehubbard@coatsrose.com

Mr. Darrell Barger

Mr. Richard Crews

HARTLINE DACUS BARGER DEYER, LLP 800 N. Shoreline Blvd.

Suite 2000, N. Tower

Corpus Christi, TX 78401

Email: dbarger@hdbdlaw.com Email: rcrews@hdbdlaw.com

APPELLATE COUNSEL: Mr. Edward S. Hubbard Mr. Patrick L. Gaas

COATS ROSE YALE RYMAN & LEE, PC 3 East Greenway Plaza, Suite 2000 Houston, TX 77046

Email: pgaas@coatsrose.com Email: ehubbard@coatsrose.com

Mr. Richard Crews

HARTLINE DACUS BARGER DEYER, LLP 800 N. Shoreline Blvd.

Suite 2000, N. Tower

Corpus Christi, TX 78401

Email: rcrews@hdbdlaw.com

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APPELLEES/CROSS-AP- JQ-Parkdale, LLC, H&JQ PD, LLC, PELLANTS W-SB Staples/SPID LLC, R-SB Staples /SPID LLC

TRIAL COUNSEL: Van Huseman Eric Stewart

HUSEMAN & STEWART

615 N. Upper Broadway #2000 Corpus Christi, Tx 78401

Tel: 361.883.3563

Fax: 361.883.0210

VHuseman@HusemanStewart.com EStewart@HusemanStewart.com APPELLATE COUNSEL: John Runde Eric Stewart

HUSEMAN & STEWART

615 N. Upper Broadway #2000 Corpus Christi, Tx 78401

Tel: 361.883.3563

Fax: 361.883.0210

JRunde@HusemanStewart.com EStewart@HusemanStewart.com

APPELLEES: Parkdale Income Partners, LP, and Capitol Area Retail Development, II, Inc.

TRIAL AND APPELLATE Paul Dodson COUNSEL: 218 Leming Ave.

Corpus Christi, Tx 78404

Tel: 361.364.7415

Fax: 361.237.1963

paul@PaulDodson.net

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REQUEST FOR ORAL ARGUMENT

JQ-Parkdale, LLC, H&JQ PD, LLC, W-SB Staples/SPID LLC, and R-

SB Staples/SPID LLC, respectfully request oral argument at the time of submission .

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TABLE OF CONTENTS

NAMES AND ADDRESSES OF ALL PARTIES ................................................ 2 REQUEST FOR ORAL ARGUMENT .................................................................. 4

TABLE OF CONTENTS .......................................................................................... 5 LIST OF AUTHORITIES.......................................................................................... 7 REPLY ISSUE ............................................................................................................ 10 Reply Issue: Texas Civil Practice and Remedies Code § 38.001 does not authorize recovery of attorney fees from a limited liability company ......... 10 STATEMENT OF FACTS ...................................................................................... 11 SUMMARY OF THE ARGUMENT ..................................................................... 11

Texas Civil Practice and Remedies Code § 38.001 does not authorize recovery of attorney fees from a limited liability company ........................... 12 Standard of review for JNOV and statutory construction ..................... 12 Primary rule of statutory interpretation: if the law is not ambiguous, read it literally ................................................................................................ 13 Chapter 38 means what it says: only individuals and corporations can be liable for attorney fees, not LLCs ......................................................... 14 LLCs are not corporations ................................................................. 14 All of First Cash’s arguments to ignore the wording of § 38.001 have been rejected ............................................................................... 17 ‘Fleming involved a limited partnership’ ....................................... 17 ‘Corporations and limited liability companies are similar’ ........ 17 ‘Attorney fees have been awarded against limited-liability entities’ .............................................................................................. 18 ‘The revision to Article 2226 was nonsubstantive’ .................... 19 The Legislature has rejected efforts to amend § 38.001 to include non-corporation entities ..................................................................... 20

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Intermediate appellate courts lack the authority to make exceptions to the American Rule ...................................................... 22 PRAYER FOR RELIEF ........................................................................................... 23 CERTIFICATE OF SERVICE ............................................................................... 24 CERTIFICATE OF COMPLIANCE .................................................................... 24 APPENDIX ................................................................................................................ 25

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LIST OF AUTHORITIES

Cases Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106 (Tex. 2009) ............................................................................. 23 Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) ............................................................................. 16, 20 Baylor Health Care Sys. v. Nat’l Elevator Indus. Health Benefit Plan, 2008 U.S. Dist. LEXIS 4304 (N.D. Tex. 2008) ................................................ 17, 21 Box v. Dallas Mexican Consulate Gen., 2014 WL 3952932, 2014 U.S. Dist.

LEXIS 111751 (N.D. Tex. 2014), aff’d, 623 Fed. Appx. 649 (5th Cir.

2015), cert. denied, 136 S. Ct. 1729 (2016) .................................................... 17 Campbell v. State, 85 S.W.3d 176 (Tex 2002) ...................................................... 20 CBIF Ltd. P’ship v. TGI Friday’s Inc., No. 050-15-00157-CV, 2016 Tex. App.

LEXIS 12844 (Tex. App.—Dallas 2016, no pet. h.) .................................... 16 Choice! Power, L.P. v. Feeley, 2016 WL 4151041, 2016 Tex. App. LEXIS 8409, (Tex. App.—Houston [1st Dist.] 2016, no pet.) ...................15, 16, 20 City of Corpus Christi v. Taylor, 126 S.W.3d 712 (Tex. App.—Corpus Christi 2004, pet. dism’d) .............................................................................................. 13 City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) ........................................ 13 Combs v. Health Care Servs. Corp., 401 S.W.3d 623 (Tex. 2013) .................... 15 Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433 (Tex. 2009). ............... 14 Epps v. Fowler, 351 S.W.3d 862 (Tex. 2011) ....................................................... 23 Exco Operating Co. v. McGee, 2016 WL 4379484, 2016 Tex. App. LEXIS 8934 (Tex. App.—Houston [1st Dist.] 2016, no pet.) (mem. op.) ............ 17 Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560 (Tex. App.—Houston [14th Dist.], pet. denied) ............................................................................. 17, 21 Fleming Foods of Tex., Inc. v. Rylander, 6 S.W.3d 278 (Tex. 1999)................ 20 Ganz v. Lyons P’ship, L.P., 173 F.R.D. 173 (N.D. Tex. 1997) ................... 17, 19 Greco v. NFL, 2015 U.S. Dist. LEXIS 96239 (N.D. Tex. 2015) ................ 17, 20 Hoffman v. L&M Arts, 2015 US. Dist. LEXIS 27784 (N.D. Tex. 2015) . 17, 18, 19, 20

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In the Interest of A.M., 101 S.W.3d 480 (Tex. App.—Corpus Christi 2002), rev’d, 192 S.W.3d 570 (Tex. 2006) .................................................................. 20 In the Interest of M.N., 262 S.W.3d 799 (Tex. 2008) ......................................... 14 Lair v. Horn, 2002 WL 34249735, 2002 Tex. App. LEXIS 2935 (Tex. App.—

Corpus Christi 2002, pet. denied) (mem. op.), cert. denied, 539 U.S. 965 (2003) ................................................................................................................... 20 Marmon v. Mustang Aviation, Inc. 430 S.W.2d 182, (Tex. 1968) ..................... 22 Molinet v. Kimbrell, 356 S.W.3d 407 (Tex. 2011) ............................................... 14 Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525 (Tex. 2000). ...................... 14 Nathan v. Whittington, 408 S.W.3d 870 (Tex. 2013) .......................................... 14 Petro. Solutions, Inc. v. Head, 454 S.W.3d 518 (Tex. App.—Corpus Christi 2011), aff’d in part, rev’d in part, (Tex. 2014) ............................................... 23 Reedy v. Pompa, 310 S.W.3d 112 (Tex. App.—Corpus Christi 2010), rev’d, (Tex. 2011) .......................................................................................................... 14 Riner v. Neumann, 353 S.W.3d 312 (Tex. App.—Dallas 2011, no pet.) ......... 23 SJ Med. Ctr., LLC v. Estahbanati, 418 S.W.3d 867 (Tex. App.—Houston [14th Dist.] 2013, no pet.)........................................................................................... 18 St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503 (Tex.1997) ................... 14 Tex. DOT v. Needham, 82 S.W.3d 314 (Tex. 2002) ........................................... 14 Tony Gullo Motor I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006). ................... 23 Traxler v. Enrgergy Gulf States, Inc., 376 S.W.3d 742 (Tex. 2012) .................. 22 Traxxas, L.P. v. Dewitt, 2015 WL 7777986, 2015 U.S. Dist. LEXIS 161763 (E.D. Tex. 2015) ................................................................................................ 17 United States v. South Buffalo Ry., 333 U.S. 771 (1947) .................................... 22 Varel Int'l Indus., L.P. v. PetroDrillbits Int'l, Inc., 2016 WL 4535779, 2016 Tex. App. LEXIS 9619 (Tex. App.— Dallas 2016, pet. denied) (mem.

op.) ....................................................................................................................... 16 Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897 (Tex. 2004) .................. 13

Statutes TEX. BUS. ORGS. CODE § 1.002 .............................................................................. 15

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TEX. CIV. PRAC. & REM. CODE § 38.001 .............................................................. 15 TEX. REV. CIV. STAT. ANN. art. 2226 (Vernon Supp. 1985) (repealed 1985) . 20

Rules TEX. R. APP. 33 ......................................................................................................... 20

Other Authorities Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 TEX. L. REV. 361, 366 (1960). ......................................................................... 13 W. Wendell Hall, & al., Hall’s Standards of Review in Texas, 42 ST. MARY’S L. J. 3 (2010) ................................................................................................................... 13

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NO. 13-16-00099-CV

________________________________________________________

IN THE COURT OF APPEALS

FOR THE THIRTEENTH DISTRICT AT CORPUS CHRISTI/EDINBURG, TEXAS

________________________________________________________

FIRST CASH, LTD

VS

JQ-PARKDALE, LLC, H&JQ PD, LLC, W-SB STAPLES/SPID LLC, R-SB STAPLES/SPID, LLC, PARKDALE INCOME PARTNERS, LP, & CAPITOL AREA RETAIL DEVELOPMENT, II, INC.

________________________________________________________

AN APPEAL FROM THE 319th COURT OF NUECES COUNTY, TEXAS

________________________________________________________

TO THE HONORABLE COURT OF APPEALS:

JQ-Parkdale, LLC, H&JQ PD, LLC, W-SB Staples/SPID, LLC, AND R-SB Staples/SPID, LLC, file their brief as Cross-Appellants.

REPLY ISSUE

Texas Civil Practice and Remedies Code § 38.001 does not authorize re-

covery of attorney fees from a limited liability company.

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STATEMENT OF FACTS

First Cash sued its Landlord, four limited liability companies (JQ-Park-

dale, LLC, H&JQ PD, LLC, W-SB Staples/SPID LLC, and R-SB Staples/ SPID LLC) jointly, for breach of a written lease and sought attorney fees under Chapter 38 of the Civil Practice and Remedies Code. C.R. 48, 52 (Fourth Amended Petition). Over objection, the trial court submitted an attorney fee question, with the caveat that it did not expect to award any attorney fees to First Cash. 20 R.R. 142, 184. The jury made a fact finding on First Cash’s attor- ney fees, but, following the Landlord’s objection, the trial court declined to award fees against those limited liability companies. 2 Supp. C.R. 4, 14-15 (Court’s Charge), 813 (Defendants’ Amended Motion for Judgment N.O.V.), 881 (Final Judgment).

SUMMARY OF THE ARGUMENT

Chapter 38 of the Civil Practice and Remedies Code authorizes an award of attorney fees only against individuals and corporations. The Landlord de- fendants are neither individuals nor corporations; they are limited liability com- panies. The trial court correctly interpreted Section 38.001 and properly fol- lowed the cases dealing with the liability of non-corporate entities under that statute when it declined to award attorney fees to First Cash.

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ARGUMENT

Reply Issue Restated: Texas Civil Practice and Remedies Code § 38.001 does not authorize recovery of attorney fees from a limited liability company.

Standards of review for JNOV and statutory construction. Appellate courts review a judgment notwithstanding the verdict under a legal sufficiency standard. City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005); W. Wendell Hall, & al., Hall’s Standards of Review in Texas, 42 ST. MARY’S L. J. 3, 195-196 (2010). Evidence is legally insufficient if the record reflects one of the follow- ing:

• there is a complete absence of evidence of a vital fact,

• the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact,

• the evidence offered to prove a vital fact is no more than a mere scintilla, or

• the evidence establishes conclusively the opposite of a vital fact.

Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 903 (Tex. 2004); City of Cor- pus Christi v. Taylor, 126 S.W.3d 712, 717-18 (Tex. App.—Corpus Christi 2004, pet. dism’d); see Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 TEX. L. REV. 361, 366 (1960).

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Questions of statutory construction are reviewed de novo. Tex. DOT v.

Needham, 82 S.W.3d 314 (Tex. 2002); Reedy v. Pompa, 310 S.W.3d 112, 117 (Tex. App.—Corpus Christi 2010), rev’d on other grounds, (Tex. 2011)

Primary rule of statutory interpretation: if the law is not ambigu-

ous, read it literally. In construing the language of a statute, the court’s pri- mary goal is to ascertain the legislative intent behind the statute and to interpret so as to give effect to that intent. In the Interest of M.N., 262 S.W.3d 799, 802 (Tex. 2008); Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). The legislature’s intent is determined primarily from the plain and com- mon meaning of the words used. Nathan v. Whittington, 408 S.W.3d 870, 872 (Tex. 2013); Reedy v. Pompa, 310 S.W.3d at 117. The words the Legislature chooses “should be the surest guide to legislative intent.” Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009).

If the statutory language is unambiguous, courts will typically adopt the interpretation supported by the statute's plain meaning. St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex.1997); Reedy v. Pompa, 310 S.W.3d at 117.This rules apply unless enforcing the plain meaning of the statute as written would produce absurd or nonsensical results. Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011). This exception, however, is a “high bar,” “reserved for

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truly exceptional cases, and mere oddity does not equal absurdity.” Combs v. Health Care Servs. Corp., 401 S.W.3d 623, 630 (Tex. 2013).

Chapter 38 means what it says: only individuals and corporations can be liable for attorney fees, not LLCs. First Cash argues it should recover its attorney fees pursuant to Chapter 38 of the Civil Practice and Remedies Code, which allows recovery of “reasonable attorney’s fees from an individual or corporation … if the claim is for … an oral or written contract.” TEX. CIV. PRAC. & REM. CODE § 38.001; First Cash’s Appellant’s brief at 14, et seq. In making this argument, First Cash ignores the literal wording of the § 38.001 and Texas’s general policy against fee shifting.

LLCs are not corporations. The Landlord’s entities are all limited liability companies, not corporations. The word "corporation" has a definite, statuto-rily-defined meaning in Texas. Choice! Power, L.P. v. Feeley, 2016 WL 4151041, 2016 Tex. App. LEXIS 8409, *28 (Tex. App.—Houston [1st Dist.] 2016, no pet.). Under the Business Organizations Code, a “corporation” means an entity governed as a corporation under Title 2 or 7 and includes for- profit, nonprofit, and professional corporations. TEX. BUS. ORGS. CODE § 1.002(14). Title 2 of the Business Organizations Code deals with corporations and Title 7 deals with

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professional entities. Limited liability companies are governed under Title 3, and partnerships are governed under Title 4. Consequently, Chapter 38 literally does not apply to First Cash’s claim for attorney fees against the defendant lim- ited liability companies.

This conclusion, based on the plain meaning of the statute, has been confirmed by the courts that have reached the issue. “Under the plain language of section 38.001, a trial court cannot order limited liability partnerships, lim- ited liability companies, or limited partnerships to pay attorney's fees.” CBIF Ltd. P’ship v. TGI Friday’s Inc., No. 050-15-00157-CV, 2016 Tex. App. LEXIS 12844, *69 (Tex. App.—Dallas 2016, no pet. h.). In support of this conclusion, the Dallas Court of Appeals relied on the literal statute and on these decisions:

• Varel Int'l Indus., L.P. v. PetroDrillbits Int'l, Inc., 2016 WL 4535779, *7, 2016 Tex. App. LEXIS 9619, *20-21 (Tex.

App.— Dallas 2016, pet. denied) (mem. op.) (acknowledging rule, but finding a fact issue as to whether defendants were corporations);1

• Choice! Power, L.P. v. Feeley, 2016 WL 4151041, 2016 Tex. App.

LEXIS 8409, *30 (section 38.001 does not permit recovery against an L.P.);

1 First Cash does not argue there is a fact issue about the Landlord entities being limited liability companies: “none of the Legacy Landlord entities … is a limited partnership— all of them are limited-liability companies.” First Cash’s Appellants’ brief at 17.

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• Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438, 452-53 (Tex.

App.—Houston [14th Dist.] 2016, pet. denied) (section 38.001 does not permit recovery against an L.L.C.);

• Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560, 574 (Tex.

App.—Houston [14th Dist.] , pet. denied) (section 38.001 does not permit recovery against an L.L.P.)).

The Dallas Court of Appeals might have cited additional cases to the same effect:

• Exco Operating Co. v. McGee, 2016 WL 4379484, *11, 2016 Tex.

App. LEXIS 8934, *5 (Tex. App.—Houston [1st Dist.] 2016, no pet.) (mem. op.) (limited partnership not liable for attorney fees);

• Traxxas, L.P. v. Dewitt, 2015 WL 7777986, 2015 U.S. Dist.

LEXIS 161763, * 23-24 (E.D. Tex. 2015) (magistrate mem.

op.) (limited partnership not liable for attorney fees, citing Ganz v. Lyons P’ship, L.P., 173 F.R.D. 173 (N.D. Tex. 1997));

• Hoffman v. L&M Arts, 2015 US. Dist. LEXIS 27784, *25 (N.D.

Tex. 2015) (limited liability company not liable for attorney fees);

• Greco v. NFL, 2015 U.S. Dist. LEXIS 96239, *11-22 (N.D.

Tex. 2015) (unincorporated association not liable for attorney fees);

• Box v. Dallas Mexican Consulate Gen., 2014 WL 3952932, 2014 U.S. Dist. LEXIS 111751, *5-7 (N.D. Tex. 2014), aff’d, 623 Fed. Appx. 649, 657 (5th Cir. 2015), cert. denied, 136 S. Ct.

1729 (2016) (foreign government not liable for attorney fees);

• Baylor Health Care Sys. v. Nat’l Elevator Indus. Health Benefit Plan, 2008 U.S. Dist. LEXIS 4304 (N.D. Tex. 2008) (ERISA selffunded trust not liable for attorney fees);

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• Ganz v. Lyons P’ship, L.P., 173 F.R.D. 173 (N.D. Tex. 1997)

(limited partnership not liable for attorney fees).

All of First Cash’s arguments to ignore the wording of § 38.001 have been rejected. The arguments made by First Cash for ignoring the literal word- ing of Section 38.001 and distinguishing Fleming have all been previously con- sidered and rejected by Texas courts of appeal.

• “Fleming involved a limited partnership.” First Cash Appellant’s brief at 17. The decisions in Alta Mesa Holdings and Hoffman v. L&M Arts, supra, rejected this distinction and applied Fleming to limited liability companies.

• “Corporations and limited liability companies are similar.” First Cash argues that because LLCs and corporation both provide providing tax and liability benefits, they should have the same attorney fee liabilities” First Cash Appellant’s brief at 17-18. The court in Hoffman v. L&M Arts considered the arguments that a limited liability company could be treated as an “individ- ual”2 or a “corporation” and rejected it. That court recognized that LLCs af- ford “corporation-like benefit of limited liability but with partnership tax treat- ment,” but found LLCs are neither corporations nor partnerships. Hoffman,

2 First Cash only argues that an LLC should be treated as a corporation, not an individual . First Cash Appellant’s brief at 18.

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2015 U.S. Dist. LEXIS 27784 at 22, citing SJ Med. Ctr., LLC v. Estahbanati, 418 S.W.3d 867, 874-75 (Tex. App.—Houston [14th Dist.] 2013, no pet). While the Business Organizations Code occasionally treats LLCs and corporations the same,

LLCs and corporations are distinct legal entities. Otherwise, there would be no need, for example, for Texas law to provide that corporations and LLCs are to be treated the same in certain enumerated circumstances.… Provisions of law that apply to corporations would necessarily pertain to LLCs.

Hoffman, 2015 U.S. Dist. LEXIS 27784 at 23, citation omitted. Corporations and LLCs have some characteristics in common, but they are not identical. Their similarities provide no basis for departing from the literal wording of § 38.001. See also Ganz, 173 F.R.D. at 177, where the court found multiple dis- tinctions between a limited partnership and a corporation that precluded treat- ing a limited partnership as a “corporation” for purposes of § 38,001.

• “Attorney fees have been awarded against limited-liability enti-

ties.” First Cash Appellant’s brief at 19, 20 at fn 8. More accurately, attorney fees have been awarded against LLCs where the applicability of Chapter 38 to limited- liability entities was not raised or discussed. Cf. Ganz, 173 F.R.D. at 175 (giving “nom- inal weight” to similar awards—“the courts’ silence suggests there was no issue raised or considered about the legality of the awarding of such fees against a

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limited partnership”). None of the cases cited by First Cash required those courts to consider the argument now presented, which was ruled upon by the trial court in this case. Issues not raised in the trial court are waived. TEX. R. APP. 33.1; Campbell v. State, 85 S.W.3d 176, 197 (Tex 2002); Lair v. Horn, 2002 WL 34249735, 2002 Tex. App. LEXIS 2935, *7-8 (Tex. App.—Corpus Christi 2002, pet. denied) (mem. op.), cert. denied, 539 U.S. 965 (2003).

• “The revision to Article 2226 was nonsubstantive.” The pre-codi-

fication version of Chapter 38 allowed an award of attorney fees for breach of contract by “a person or corporation.” TEX. REV. CIV. STAT. ANN. art. 2226 (Vernon Supp. 1985)(repealed 1985). Codification is generally nonsubstantive, but that is not always the rule. Where “specific provisions of a ‘nonsubstantive’ codification and the code as a whole are direct, unambiguous, and cannot be reconciled with prior law, the codification rather than the prior, repealed statute must be given effect.” Fleming Foods of Tex., Inc. v. Rylander, 6 S.W.3d 278, 286 (Tex. 1999); In the Interest of A.M., 101 S.W.3d 480, 489 (Tex. App.—Corpus Christi 2002), rev’d on other grounds, 192 S.W.3d 570 (Tex. 2006). The Fleming Foods analysis was cited in several of the decisions rejecting the argument now made by First Cash. See Choice! Power, L.P., 2016 Tex App. LEXIS 8409 at * 26; Alta Mesa Holdings, L.P. 2016 Tex. App. LEXIS 3872 at *38-40; Greco, 2015 U.S.

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Dist. LEXIS 96239 at *17; Hoffman v. L&M Arts, 2015 U.S. Dist. LEXIS 27784 at *27; Fleming & Assocs., L.L.P., 425 S.W.3d at 575; Baylor Health Care Sys., 2008 U.S. Dist. LEXIS 43044 at *13-15.

The Legislature has rejected efforts to amend § 38.001 to include non-

corporation entities. The Texas Legislature has twice considered and twice re- jected modifications to allow attorney fees to be awarded against other entities under Chapter 38.

The Fleming Associates decision was handed down in 2014. Thereafter, House Bill 230 was introduced in the Texas Legislature; this bill would have amended § 38.001(a) to allow recovery of reasonable attorney’s fees, in certain cases, from an individual “or other legal entity.” See Appendix 1.3 The Bill Analysis states the bill was motivated by “a recent court decision … that a re- covery of attorney’s fees under certain civil practice and remedies provisions is inapplicable to partnership, and the parties are concerned that this could also be interpreted to mean that the statute is inapplicable to limited partnership and

3 Exhibits 1-3 can be found through the website of the Legislative Reference Library of Texas: http://www.lrl.state.tx.us/legis/billsearch/BillDetails.cfm?legSession=84- 0&billtypeDetail=HB&billNumberDetail=230&billSuffixDetail=&start Row=1&IDlist=&unClicklist=&number=100 (last accessed December 30, 2016).

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limited liability companies as well. Appendix 2. Although the bill passed the House, it died in the Senate and never became law. Appendix 3.

In 2011, after the Ganz and Greco decisions, House Bill 274 was pro-

posed to amend § 38.001 and allow reasonable attorney’s fees to “the prevailing party with respect to a claim … from an individual, corporation, or other legal en- tity” in a breach of contract action. Appendix 4.4 H.B. 274, 82nd Leg., Reg. Sess. (Tex. 2011) (as introduced Mar. 10, 2011). The bill analysis indicated the amendment would have broadened the scope of § 38.001 to make partnerships, limited liability companies, trusts, and other non-corporate legal entities to po- tential liability for attorney’s fees. Appendix 5. The Bill passed the House, but without this particular change to § 38.001. Exhibit 6. H.B. 274 eventually be- came law, but only after it was amended to remove the proposed changes to § 38.001. Appendix 7, 8.

Courts presume the Legislature acts with awareness of relevant case law.

Traxler v. Entergy Gulf States, Inc., 376 S.W.3d 742 748 (Tex. 2012). Should an in- terpretation of a statute by the courts be unacceptable to the Legislature, a sim- ple remedy is available by the process of legislative amendment. United States v.

4 Emphasis added. Exhibits 4-6 can also be found through the website of the Legislative Reference Library of Texas: http://www.lrl.state.tx.us/legis/billsearch/text.cfm?legSession =82-0&billtypeDetail=HB&billNumberDetail=274&billSuffixDetail=&start Row=1&IDlist=&unClicklist=&number=100 (last accessed December 30, 2016).

22

South Buffalo Ry., 333 U.S. 771, 775 (1947), cited in Marmon v. Mustang Aviation, Inc., 430 S.W.2d 182, 186 (Tex. 1968). The Legislature acquiesced in the inter- pretation of § 38.001 that removes non-corporation entities from liability for attorney fees; it is not up to the courts to rule otherwise.

Intermediate appellate courts lack the authority to make exceptions to the American Rule. Texas follows the American Rule, whereby litigants may re- cover attorney fees only as provided by statute or contract. Epps v. Fowler, 351 S.W.3d 862, 865 (Tex. 2011); Petro. Solutions, Inc. v. Head, 454 S.W.3d 518, 560 (Tex. App.—Corpus Christi 2011), aff’d in part, rev’d in part on other grounds (Tex. 2014). This settled principle has been part of the state’s jurisprudence for over one hundred years. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 120 (Tex. 2009); Riner v. Neumann, 353 S.W.3d 312, 322 (Tex. App.—Dallas 2011, no pet.). The Texas Supreme Court contin- ues to adhere to the Rule. See, Tony Gullo Motor I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006). If an exception to the American Rule is to be created from whole cloth, that is the job of the Supreme Court, and intermediate courts are not at liberty to create equitable exceptions to the Rule. Riner, 353 S.W.3d at 323.

23

PRAYER FOR RELIEF

WHEREFORE, Appellees pray that this Court deny the relief sought by First Cash, for costs of court, and for general relief.

Respectfully submitted

/s/ John Runde

John Runde

Tx Bar # 24093084

Eric Stewart

Tx Bar # 24058133

HUSEMAN & STEWART

615 N. Upper Broadway #2000 Corpus Christi, Tx 78401

Tel: 361.883.3563

Fax: 361.883.0210

JRunde@HusemanStewart.com EStewart@HusemanStewart.com

24

CERTIFICATE OF SERVICE

By affixing my signature below, I certify that a true copy of the foregoing document was delivered on December 30, 2016, to the following attorneys in accordance with the Texas Rules of Appellate Procedure:

Mr. Edward S. Hubbard Mr. Patrick L. Gaas COATS ROSE YALE RYMAN & LEE, PC 3 East Greenway Plaza, Suite 2000 Houston, TX 77046

Mr. Richard Crews HARTLINE DACUS BARGER DEYER, LLP 800 N. Shoreline Blvd.

Suite 2000, N. Tower Corpus Christi, TX 78401

Paul Dodson 218 Leming Ave.

Corpus Christi, Tx 78404

/s/ John Runde

John Runde

CERTIFICATE OF COMPLIANCE

The number of words in this document, excluding those provisions described in TEX. R. APP. P. 9.4(i)(1) is 2642. This figure is provided in reliance on the word count of the computer program used to prepare this document.

25

NO. 13-16-00099-CV

________________________________________________________

IN THE COURT OF APPEALS

FOR THE THIRTEENTH DISTRICT AT CORPUS CHRISTI/EDINBURG, TEXAS

________________________________________________________

FIRST CASH, LTD

VS

JQ-PARKDALE, LLC, H&JQ PD, LLC, W-SB STAPLES/SPID LLC, R-SB STAPLES/SPID, LLC, PARKDALE INCOME PARTNERS, LP, & CAPITOL AREA RETAIL DEVELOPMENT, II, INC.

________________________________________________________

AN APPEAL FROM THE 319th COURT OF NUECES COUNTY, TEXAS

________________________________________________________

APPENDIX

Tab Document Record reference

1 H.B. No. 230 C.R. 835 2 H.B. No. 230 (bill analysis) C.R. 837 3 H.B. No. 230 (actions taken) C.R. 838 4 H.B. No. 274 C.R. 840 5. H.B. No. 274 (bill analysis) C.R. 853 6. H.B. No. 274 (modified) C.R. 856 7. H.B. No. 274 (enacted) C.R. 866 8. H.B. No. 274 (actions taken) C.R. 874

835

By:AAFarrar H.B.ANo.A230

A BILL TO BE ENTITLED

1 AN ACT 2 relating to recovery of attorney ’s fees in certain civil cases. 3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 4 SECTIONA1.AASection 38.001, Civil Practice and Remedies 5 Code, is amended to read as follows: 6 Sec.A38.001.AARECOVERY OF ATTORNEY ’S FEES. (a) Except as 7 provided by Subsection (b), a [A] person may recover reasonable 8 attorney ’s fees from an individual, [or] corporation, or other 9 legal entity, in addition to the amount of a valid claim and costs, 10 if the claim is for: 11 (1)AArendered services; 12 (2)AAperformed labor; 13 (3)AAfurnished material; 14 (4)AAfreight or express overcharges; 15 (5)AAlost or damaged freight or express; 16 (6)AAkilled or injured stock; 17 (7)AAa sworn account; or 18 (8)AAan oral or written contract. 19 (b)AASubsection (a) does not authorize the recovery of 20 attorney ’s fees from the state, an agency or institution of the 21 state, or a political subdivision of the state. This section does 22 not affect any other statute regarding the recovery of attorney ’s 23 fees from the state, an agency or institution of the state, or a 24 political subdivision of the state.

84R1790 CAE-F 1

836

H.B.ANo.A230

1 SECTIONA2.AAThe change in law made by this Act applies only 2 to an award of attorney ’s fees in an action commenced on or after 3 the effective date of this Act. An award of attorney ’s fees in an 4 action commenced before the effective date of this Act is governed 5 by the law applicable to the award immediately before the effective 6 date of this Act, and that law is continued in effect for that 7 purpose. 8 SECTIONA3.AAThis Act takes effect September 1, 2015.

837

BILL ANALYSIS

H.B. 230

By: Farrar

Judiciary & Civil Jurisprudence Committee Report (Unamended)

BACKGROUND AND PURPOSE

Interested parties point out that a recent court decision held that a recovery of attorney's fees under certain civil practice and remedies provisions is inapplicable to partnerships, and the parties are concerned that this could also be interpreted to mean that the statute is inapplicable to limited partnerships and limited liability companies as well. H.B. 230 seeks to clarify this matter.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 230 amends the Civil Practice and Remedies Code to include, in addition to an individual and a corporation, other legal entities among the parties to certain civil cases from which a person is authorized to recover reasonable attorney's fees. The bill establishes that this provision does not authorize the recovery of attorney's fees from the state, an agency or institution of the state, or a political subdivision of the state and that the recovery of attorney's fees in the applicable cases does not affect any other statute regarding the recovery of attorney's fees from these state entities.

EFFECTIVE DATE September 1, 2015.

84R 14119 15.65.307

Texas Legislature Online History

Bill: HB 230 Legislative Session: 84(R) Council Document: 84R 1790 CAE-F

Last Action: 05/21/2015 S Left pending in committee

Caption Version: Engrossed Caption Text: Relating to recovery of attorney's fees in certain civil cases.

Author: Farrar Sponsor: Ellis

Subjects: Civil Remedies & Liabilities (I0065)

Lawyers (I0515)

ATTORNEY'S FEES (S0202)

House Committee: Judiciary & Civil Jurisprudence Status: Out of committee Vote: Ayes=9 Nays=0 Present Not Voting=0 Absent=0

Senate Committee: State Affairs Status: In committee

Actions: (descending date order) Viewing Votes: Most Recent House Vote Description Comment Date Time Journal Page S Left pending in committee 05/21/2015 S Considered in public hearing 05/21/2015 S Scheduled for public hearing on . . . 05/21/2015 S Referred to State Affairs 05/04/2015 1296 S Read first time 05/04/2015 1296 S Received from the House 04/13/2015 763 H Reported engrossed 04/10/2015 08:03 AM 1530 H Nonrecord vote recorded in Journal 04/09/2015 1449 H Record vote RV#181 04/09/2015 1449 H Passed 04/09/2015 1449 H Read 3rd time 04/09/2015 1449 H Nonrecord vote recorded in Journal 04/09/2015 1442 H Passed to engrossment 04/09/2015 1442

H Read 2nd time 04/09/2015 1442 H Placed on Local, Consent, and Res. Calendar 04/09/2015 H Considered in Local & Consent Calendars 04/06/2015 H Comm. report sent to Local & Consent Calendar 03/23/2015 H Committee report distributed 03/19/2015 02:58 PM H Comte report filed with Committee Coordinator 03/19/2015 961 838

H Reported favorably w/o amendment(s) 03/17/2015

839

H Recommended to be sent to Local & Consent 03/17/2015 H Considered in public hearing 03/17/2015 H Left pending in committee 03/10/2015 H Testimony taken/registration(s) recorded in committee 03/10/2015 H Considered in public hearing 03/10/2015 H Scheduled for public hearing on . . . 03/10/2015 H Referred to Judiciary & Civil Jurisprudence 02/10/2015 11:34 AM 264 H Read first time 02/10/2015 264 H Filed 11/11/2014

840

By:AACreighton H.B.ANo.A274

A BILL TO BE ENTITLED

1 AN ACT 2 relating to attorney ’s fees, early dismissal, expedited trials, and 3 the reform of certain remedies and procedures in civil actions. 4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 5 SECTIONA1.AAChapter 38, Civil Practice and Remedies Code, is 6 amended by designating Sections 38.001 through 38.006 as Subchapter 7 A, Chapter 38, Civil Practice and Remedies Code, and adding a 8 heading to Subchapter A to read as follows: 9 SUBCHAPTER A. RECOVERY OF ATTORNEY ’S FEES BY PREVAILING PARTY 10 SECTIONA2.AASections 38.001, 38.002, and 38.006, Civil 11 Practice and Remedies Code, are amended to read as follows: 12 Sec.A38.001.AARECOVERY OF ATTORNEY ’S FEES. The prevailing 13 party with respect to a claim [A person] may recover reasonable 14 attorney ’s fees from an individual, [or] corporation, or other 15 legal entity [in addition to the amount of a valid claim and costs,] 16 if the claim is for: 17 (1)AArendered services; 18 (2)AAperformed labor; 19 (3)AAfurnished material; 20 (4)AAfreight or express overcharges; 21 (5)AAlost or damaged freight or express; 22 (6)AAkilled or injured stock; 23 (7)AAa sworn account; or 24 (8)AAan oral or written contract.

82R13370 CAE-F 1

841

H.B.ANo.A274

1 Sec.A38.002.AAPROCEDURE FOR RECOVERY OF ATTORNEY ’S FEES. 2 Attorney ’s [To recover attorney ’s] fees may be recovered under this 3 subchapter if [chapter]: 4 (1)AAthe person seeking to recover attorney ’s fees is 5 [claimant must be] represented by an attorney; 6 (2)AAthe claimant presents [must present] the claim to 7 the opposing party or to a duly authorized agent of the opposing 8 party; and 9 (3)AApayment for the just amount owed is [must] not 10 [have been] tendered before the expiration of the 30th day after the 11 claim is presented. 12 Sec.A38.006.AAEXCEPTIONS. This subchapter [chapter] does 13 not apply to a contract issued by an insurer that is subject to the 14 provisions of: 15 (1)AATitle 11, Insurance Code; 16 (2)AAChapter 541, Insurance Code; 17 (3)AAthe Unfair Claim Settlement Practices Act 18 (Subchapter A, Chapter 542, Insurance Code); or 19 (4)AASubchapter B, Chapter 542, Insurance Code. 20 SECTIONA3.AAChapter 38, Civil Practice and Remedies Code, is 21 amended by adding Subchapter B to read as follows: 22 SUBCHAPTER B. ELECTION REGARDING LITIGATION COSTS 23 Sec.A38.011.AADEFINITIONS. In this subchapter: 24 (1)AA"Abusive civil action" means a civil action that a 25 reasonable person would conclude is an abuse of the civil justice 26 process. 27 (2)AA"Claim" means a request for monetary damages filed

842

H.B.ANo.A274

1 in a civil action, other than a request for reimbursement of 2 attorney ’s fees or other costs of litigation in a civil action, if 3 the request is for: 4 (A)AAdamages for alleged personal injury, 5 property damage, breach of contract, or death, regardless of the 6 legal theories or statutes on the basis of which recovery is sought; 7 or 8 (B)AAdamages other than for alleged personal 9 injury, property damage, or death allegedly resulting from any 10 tortious conduct, regardless of the legal theories or statutes on 11 the basis of which recovery is sought. 12 (3)AA"Claimant" means a party who has asserted a claim, 13 including a plaintiff, counterclaimant, cross-claimant, 14 third-party plaintiff, or intervenor. 15 (4)AA"Defendant" means a party against whom a claim has 16 been made, including a defendant, counterdefendant, 17 cross-defendant, or third-party defendant. 18 (5)AA"Financial interest" means a financial interest 19 held by an attorney under an agreement between the attorney and a 20 claimant or defendant in which the amount or the payment of the fee 21 for the attorney ’s legal services is contingent wholly or partly on 22 the outcome of the civil action. 23 Sec.A38.012.AAAPPLICABILITY. (a) This subchapter does not 24 apply to: 25 (1)AAa class action; 26 (2)AAa shareholder ’s derivative action; 27 (3)AAan action brought under the Family Code;

843

H.B.ANo.A274

1 (4)AAan action to collect workers ’ compensation 2 benefits under Subtitle A, Title 5, Labor Code; or 3 (5)AAan action filed in a justice of the peace court. 4 (b)AAThis subchapter does not apply to a civil action in 5 which the amount in controversy, including all requests for 6 damages, reimbursement of attorney ’s fees, and litigation costs, is 7 less than $100,000 and the claimant has made an election to proceed 8 under Chapter 29A. 9 Sec.A38.013.AAELECTION. (a) A defendant may elect to apply 10 the provisions of this subchapter to any civil action in which a 11 claimant has asserted a claim against the defendant. 12 (b)AAAn election under this section must identify each 13 claimant against whom the election is made. An election may not be 14 made before the 60th day after the date the defendant filed an 15 answer to the claimant ’s civil action or within 60 days of the date 16 of trial. The election must be: 17 (1)AAin writing; 18 (2)AAsigned by the attorneys of record of the 19 defendant; 20 (3)AAfiled with the papers as part of the record; and 21 (4)AAserved on all claimants against whom the election 22 is made. 23 (c)AAA deadline under this subchapter may be amended or 24 modified by agreement of the parties or by order of the court in a 25 discovery control plan as provided by Rule 190, Texas Rules of Civil 26 Procedure. 27 Sec.A38.014.AAREVOCATION OF ELECTION. (a) An election made

844

H.B.ANo.A274

1 under Section 38.013 may be revoked wholly or partly by agreement of 2 the parties. 3 (b)AAA revocation under this section must identify the 4 claimants and defendants for whom the revocation is made. A 5 revocation may be made at any time before an award is made under 6 Section 38.016 based on the election. The revocation must be: 7 (1)AAin writing; 8 (2)AAsigned by the attorneys of record of all parties to 9 whom the revocation applies; and 10 (3)AAfiled as part of the record. 11 Sec.A38.015.AADISMISSAL OR NONSUIT OF ACTION. If a claimant 12 against whom an election is made under Section 38.013 nonsuits or 13 voluntarily dismisses with prejudice the civil action for which the 14 election is made not later than the 15th day after the date the 15 claimant was served with the election, the election does not apply 16 to the nonsuited or dismissed civil action. 17 Sec.A38.016.AAAWARD OF LITIGATION COSTS. (a) If an election 18 is made under this subchapter, the prevailing party may recover the 19 prevailing party ’s litigation costs. 20 (b)AAThe determination of which party is the prevailing party 21 is a question of law for the court. 22 (c)AALitigation costs under this subchapter are costs 23 directly related to the civil action between the claimant and the 24 defendant. Litigation costs include: 25 (1)AAreasonable and necessary attorney ’s fees; 26 (2)AAreasonable and necessary travel expenses; 27 (3)AAreasonable fees for not more than two testifying

845

H.B.ANo.A274

1 expert witnesses; and 2 (4)AAcourt costs. 3 (d)AAA fee agreement that results in a fee that is fixed or 4 contingent on results obtained or uncertainty of collection before 5 the legal services have been rendered may not be considered in the 6 determination of the amount of reasonable and necessary attorney ’s 7 fees. 8 Sec.A38.017.AALIABILITY OF ATTORNEY. (a) This section 9 applies to a civil action if: 10 (1)AAa party is entitled to recover litigation costs 11 under Section 38.016; 12 (2)AAthe election under Section 38.013 states that the 13 party making the election will seek litigation costs under this 14 section; and 15 (3)AAan attorney of record for the party against whom 16 litigation costs are recoverable has a financial interest in the 17 civil action. 18 (b)AAIf the trier of fact determines that a civil action is an 19 abusive civil action, an attorney of record for the party against 20 whom litigation costs are recoverable is liable to the prevailing 21 party, jointly and severally, for the amount of the litigation 22 costs awarded. 23 (c)AAThe determination of whether an attorney has a financial 24 interest in a civil action is a question of law for the court. An 25 attorney is not an attorney of record for the purposes of this 26 section if the attorney withdraws as attorney of record and 27 relinquishes any financial interest in the civil action more than

846

H.B.ANo.A274

1 60 days before trial. 2 (d)AAThe determination of whether a civil action is an 3 abusive civil action is a question of fact. In a case in which the 4 determination of whether a civil action is an abusive civil action 5 is submitted to a jury, the charge to the jury must ask whether the 6 civil action prosecuted by the claimant was an abusive civil 7 action. The following instruction must be included in the 8 charge:AA"You are instructed that an abusive civil action is a 9 civil action that a reasonable person would conclude is an abuse of 10 the civil justice process." 11 Sec.A38.018.AAAPPLICABILITY OF OTHER LAW. (a) Except as 12 provided by Subsection (b), if an election is made under this 13 subchapter, this subchapter controls over any other law to the 14 extent the other law requires, authorizes, prohibits, or otherwise 15 governs the award of attorney ’s fees or other costs of litigation in 16 connection with the civil action. 17 (b)AAThis subchapter does not govern the recovery of 18 litigation costs incurred in connection with a claim asserted 19 under: 20 (1)AASubchapter E, Chapter 17, Business & Commerce 21 Code; or 22 (2)AAChapter 541, Insurance Code. 23 SECTIONA4.AASection 51.014, Civil Practice and Remedies 24 Code, is amended by amending Subsections (d) and (e) and adding 25 Subsections (f) and (g) to read as follows: 26 (d)AAA person may appeal from an interlocutory order of a 27 district court, county court at law, or county court that is [may

847

H.B.ANo.A274

1 issue a written order for interlocutory appeal in a civil action] 2 not otherwise appealable [under this section] if: 3 (1)AA[the parties agree that] the order to be appealed 4 involves a controlling question of law as to which there is a 5 substantial ground for difference of opinion; 6 (2)AAan immediate appeal from the order may materially 7 advance the ultimate termination of the litigation; and 8 (3)AAthe court of appeals accepts the interlocutory 9 appeal as provided by Subsection (f) [the parties agree to the 10 order]. 11 (e)AAAn appeal under Subsection (d) does not stay proceedings 12 in the trial court unless the parties agree to a stay or [and] the 13 trial court or appellate court[, the court of appeals, or a judge of 14 the court of appeals] orders a stay of the proceedings pending 15 appeal. 16 (f)AAAn appellate court may, in its discretion, accept an 17 appeal permitted by Subsection (d) if the appealing party, not 18 later than the 15th day after the date the trial court signs the 19 order to be appealed, files in the court of appeals an application 20 for interlocutory appeal. The application must state the reasons 21 why an appeal is warranted under Subsection (d). If the court of 22 appeals accepts the appeal, the appeal is governed by the 23 procedures set forth in the Texas Rules of Appellate Procedure for 24 pursuing an accelerated appeal. The date the court of appeals 25 enters the order accepting the appeal starts the time for filing the 26 notice of appeal. 27 (g)AAIf a party pursues an appeal under this section, the

848

H.B.ANo.A274

1 trial court must state whether the trial court believes that an 2 appeal is warranted under Subsection (d). 3 SECTIONA5.AASubtitle B, Title 2, Civil Practice and Remedies 4 Code, is amended by adding Chapters 29 and 29A to read as follows: 5 CHAPTER 29. EARLY DISMISSAL OF ACTIONS 6 Sec.A29.001.AAPOLICY. It is the policy of this state that 7 all civil actions be disposed of fairly, promptly, and with the 8 least possible expense to the litigants and to the state. 9 Sec.A29.002.AAADOPTION OF RULES BY SUPREME COURT. (a) The 10 supreme court shall adopt rules to provide for the fair and early 11 dismissal of non-meritorious cases. 12 (b)AAThe supreme court shall model the rules after Rules 9 13 and 12, Federal Rules of Civil Procedure, to the extent possible. 14 (c)AAThe supreme court shall adopt rules under this chapter 15 not later than December 31, 2011. This subsection expires 16 September 1, 2012. 17 CHAPTER 29A. EXPEDITED CIVIL ACTIONS 18 Sec.A29A.001.AADEFINITIONS. In this chapter: 19 (1)AA"Claim" means a request, including a counterclaim, 20 cross-claim, or third-party claim, to recover monetary damages. 21 (2)AA"Claimant" means a party, including a plaintiff, 22 counterclaimant, cross-claimant, third-party plaintiff, or 23 intervenor, seeking recovery of damages and, in an action for 24 recovery of damages for injury to another person, damage to 25 property of another person, death of another person, or harm to 26 another person, includes both the other person and the party 27 seeking recovery of damages.

849

H.B.ANo.A274

1 (3)AA"Damages" means all claims under common law or 2 statutory and equitable causes of action for actual damages, 3 including economic and noneconomic damages, and additional 4 damages, including knowing damages, punitive damages, treble 5 damages, penalties, prejudgment interest, postjudgment interest, 6 attorney ’s fees, litigation costs, costs of court, and all other 7 damages of any kind. 8 (4)AA"Defendant" means a party, including a 9 counterdefendant, cross-defendant, or third-party defendant, from 10 whom a claimant seeks damages. 11 Sec.A29A.002.AAAPPLICABILITY. (a) This chapter applies to 12 any party who is a claimant or defendant, including: 13 (1)AAa county; 14 (2)AAa municipality; 15 (3)AAa public school district; 16 (4)AAa public junior college district; 17 (5)AAa charitable organization; 18 (6)AAa nonprofit organization; 19 (7)AAa hospital district; 20 (8)AAa hospital authority; 21 (9)AAany other political subdivision of the state; and 22 (10)AAthe State of Texas. 23 (b)AAThis chapter does not apply to any civil action 24 primarily governed by the Family Code. 25 (c)AAIn an action to which this chapter applies, the 26 provisions of this chapter prevail over all other law to the extent 27 of any conflict.

850

H.B.ANo.A274

1 (d)AAThis chapter does not waive sovereign immunity or 2 governmental immunity of any claimant or defendant. 3 Sec.A29A.003.AACLAIMANT TO MAKE ELECTION. (a) This chapter 4 applies only in a civil action in which: 5 (1)AAthe total amount of damages the claimant seeks to 6 recover for all claims is not less than $10,000 and not more than 7 $100,000; and 8 (2)AAthe claimant files and serves a written election 9 under this chapter. 10 (b)AAAn election must be made at the time the electing 11 claimant first files a claim in the action. 12 (c)AANotwithstanding Subsection (b), and on the agreement of 13 all parties, a claimant may make an election not later than the 60th 14 day after the date the last defendant has filed an answer. 15 (d)AAAn election made by a claimant under this section is 16 binding on all parties to the expedited civil action unless a 17 defendant files a claim more than 60 days before trial and in that 18 claim makes a good faith claim that the recovery of monetary damages 19 might be in excess of $100,000. 20 Sec.A29A.004.AARULES. (a) The supreme court shall adopt 21 rules to implement this chapter. The rules shall promote the 22 prompt, efficient, and cost-effective resolution of an expedited 23 civil action, including the discovery between the parties. 24 (b)AAThe supreme court shall adopt rules as required by this 25 section not later than January 1, 2012. This subsection expires 26 September 1, 2012. 27 Sec.A29A.005.AACONFLICT OF LAWS. In the event of a conflict

851

H.B.ANo.A274

1 between this chapter and Chapter 74, Chapter 74 prevails. 2 SECTIONA6.AASection 22.225(d), Government Code, is amended 3 to read as follows: 4 (d)AAA petition for review is allowed to the supreme court 5 for an appeal from an interlocutory order described by Section 6 51.014(a)(3), (6), or (11) or (d), Civil Practice and Remedies 7 Code. 8 SECTIONA7.AASubchapter C, Chapter 311, Government Code, is 9 amended by adding Section 311.035 to read as follows: 10 Sec.A311.035.AANO IMPLIED CAUSE OF ACTION. A statute may not 11 be construed to create a cause of action unless a cause of action is 12 created by clear and unambiguous language in the statute. 13 SECTIONA8.AASubchapter B, Chapter 312, Government Code, is 14 amended by adding Section 312.017 to read as follows: 15 Sec.A312.017.AANO IMPLIED CAUSE OF ACTION. A statute may not 16 be construed to create a cause of action unless a cause of action is 17 created by clear and unambiguous language in the statute. 18 SECTIONA9.AAThis Act applies only to a civil action filed on 19 or after the effective date of this Act. An action filed before the 20 effective date of this Act, including an action filed before that 21 date on which a party is joined or designated after that date, is 22 governed by the law in effect immediately before the effective date 23 of this Act, and that law is continued in effect for that purpose. 24 SECTIONA10.AAIf any provision of this Act or its application 25 to any person or circumstance is held invalid, the invalidity does 26 not affect other provisions or applications of this Act that can be 27 given effect without the invalid provision or application, and to

852

H.B.ANo.A274

1 this end the provisions of this Act are severable. 2 SECTIONA11.AAThis Act takes effect September 1, 2011.

853

BILL ANALYSIS

C.S.H.B. 274

By: Creighton

Judiciary & Civil Jurisprudence Committee Report (Substituted)

BACKGROUND AND PURPOSE

Interested parties contend that the civil justice system needs to be more efficient, less expensive, and more accessible. C.S.H.B. 274 proposes certain reforms to make the civil justice system more efficient, less costly, and more accessible by reforming certain procedures in these cases and making available certain new procedures.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the Supreme Court of Texas in SECTIONS 1.01 and 2.01 of this bill.

ANALYSIS Early Dismissal of Actions

C.S.H.B. 274 amends the Government Code to require the supreme court to adopt rules to provide for the dismissal of certain causes of action that the supreme court determines should be disposed of as a matter of law on motion and without evidence.

C.S.H.B. 274 amends the Civil Practice and Remedies Code to authorize a court, in a civil proceeding, on a trial court's granting or denial, in whole or in part, of a motion to dismiss filed under the rules adopted by the supreme court Section 22.004(g), Government Code, to award costs and reasonable and necessary attorney's fees to the prevailing party that the court determines are equitable and just.

Expedited Civil Actions

C.S.H.B. 274 amends the Government Code to require the supreme court to adopt rules to promote the prompt, efficient, and cost-effective resolution of civil actions in which the amount in controversy, inclusive of all claims for damages of any kind, whether actual or exemplary, a penalty, attorney's fees, expenses, costs, interest, or any other type of damage of any kind, is more than $10,000 but does not exceed $100,000. The bill requires the rules to address the need for lowering discovery costs in these actions and the procedure for ensuring that these actions will be expedited in the civil justice system. The bill prohibits the supreme court from adopting rules that conflict with the Family Code, the Property Code, the Tax Code or Chapter 74 of the Civil Practice and Remedies Code.

No Implied Cause of Action

C.S.H.B. 274 amends the Government Code to prohibit a statute from being construed to create a cause of action unless the statute by clear and unambiguous language creates a cause of action.

Appeal of Controlling Question of Law

C.S.H.B. 274 amends the Civil Practice and Remedies Code to authorize a trial court in a civil action, on a party's motion or on its own initiative and by written order, to permit an appeal from an order

C.S.H.B. 274 82(R) 1

854

that is not otherwise appealable if the order involves a controlling question of law as to which there is a substantial ground for disagreement, and an immediate appeal may materially advance the termination of the litigation. The bill removes the requirement that the parties agree for such an order to be subject to immediate appeal. The bill specifies that an appeal does not stay proceedings in the trial court unless either the parties agree to a stay or the trial or appellate court orders a stay of the proceedings pending appeal. The bill removes language authorizing a judge of the court of appeals to order a stay.

C.S.H.B. 274 authorizes an appellate court to accept such an appeal if the appealing party, not later than the 15th day after the date the trial court signs the order to be appealed, files in the court of appeals having appellate jurisdiction over the action an application for interlocutory appeal explaining why such an appeal is warranted. The bill specifies that if the court of appeals accepts the appeal, the appeal is governed by the procedures in the Texas Rules of Appellate Procedure for pursuing an accelerated appeal. The bill starts the time applicable to filing the notice of appeal on the date the court of appeals enters the order accepting the appeal.

C.S.H.B. 274 amends the Civil Practice and Remedies Code to require the appealing party to pay costs and attorney's fees if the order appealed from is affirmed, amends the Government Code to allow a petition for review to the supreme court for an appeal of the order, and specifies that the bill's provisions relating to the appeal of controlling questions of law are effective September 1, 2011.

Recovery of Attorney's Fees

C.S.H.B. 274 amends the Civil Practice and Remedies Code to establish that the prevailing party, rather than only the claimant, may recover reasonable attorney's fees from an individual, corporation, or other legal entity if a claim is for breach of an oral or written contract. The bill makes conforming changes and specifies that the bill's provisions relating to the recovery of attorney's fees are effective September 1, 2011.

Allocation of Litigation Costs

C.S.H.B. 274 amends the Civil Practice and Remedies Code to redefine "litigation costs" to include reasonable deposition costs and to redefine "settlement offer." The bill specifies that provisions of law relating to offers of settlement do not apply to an action filed in a small claims court. The bill specifies that an offer to settle or compromise a claim that does not comply with provisions of law relating to making a settlement offer does not entitle any party, rather than only the offering party, to recover litigation costs.

C.S.H.B. 274 authorizes a defendant filing a declaration under provisions of law relating to making a settlement offer and any party with a claim against that defendant to make a settlement offer to settle all claims in the action between the parties. The bill specifies that the parties are not required to file a settlement offer with the court. The bill specifies that the litigation costs that may be recovered by the offering party are limited to those litigation costs incurred by the offering party after the date the rejecting party rejected the earliest settlement offer that entitles the party to an award of litigation costs. The bill repeals provisions of law relating to a limitation on recovery of litigation costs and to the awarding of litigation costs as an offset.

C.S.H.B. 274 makes conforming and nonsubstantive changes and specifies that the bill's provisions relating to the allocation of litigation costs are effective September 1, 2011.

C.S.H.B. 274 repeals Sections 42.004(d) and (g), Civil Practice and Remedies Code, effective September 1, 2011.

EFFECTIVE DATE

Except as otherwise provided, on passage, or, if the bill does not receive the necessary vote, September 1, 2011.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 274 omits a provision included in the original establishing state policy regarding the early dismissal of civil actions. The substitute differs from the original by requiring the supreme court to adopt rules to provide for the dismissal of certain causes of action that the supreme court determines C.S.H.B. 274 82(R) 2

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should be disposed of as a matter of law on motion and without evidence, whereas the original requires the rules to provide for the fair and early dismissal of non-meritorious cases. The substitute omits provisions included in the original requiring the supreme court to model the rules after specified Federal Rules of Civil Procedure. The substitute omits a provision included in the original relating to a deadline for adopting those rules and setting an expiration date for that provision.

C.S.H.B. 274 contains a provision not included in the original setting out provisions for the award of attorney's fees in relation to certain motions to dismiss.

C.S.H.B. 274 omits provisions included in the original relating to expedited civil actions, including definitions, applicability, and the claimant's option to elect an expedited civil action. The substitute differs from the original by requiring the supreme court to adopt rules to promote the prompt, efficient, and cost-effective resolution of certain civil actions that address the need for lowering discovery costs in those actions and the procedure for ensuring that those actions are expedited, whereas the original requires the adopted rules to implement provisions of the bill that promote the prompt, efficient, and cost-effective resolution of an expedited civil action, including the discovery between parties. The substitute omits a provision included in the original relating to a deadline for adopting those rules and setting an expiration date for that provision. The substitute differs from the original by prohibiting the supreme court from adopting rules that conflict with the Family Code, the Property Code, the Tax Code, or certain provisions of the Civil Practice and Remedies Code, whereas the original establishes that certain provisions of the Civil Practice and Remedies Code prevail over the rules in the event of a conflict.

C.S.H.B. 274 retains a provision included in the original that prohibits a statute from being construed to create a cause of action absent clear and unambiguous language and omits a provision included in the original that duplicates this provision in another general statutory provision.

C.S.H.B. 274 differs from the original by authorizing a trial court in a civil action, on a party's motion or on its own initiative and by written order, to permit an appeal from an order that is not otherwise appealable, whereas the original authorizes a person to seek an appeal from an interlocutory order of certain courts with the appellate court without first obtaining an order from the trial court allowing the appeal. The substitute contains provisions not included in the original clarifying that an appeal from an order that is not otherwise appealable is filed with the court of appeals having appellate jurisdiction over the action and requiring the appealing party to pay costs and attorney's fees if the order is affirmed. The substitute omits a provision included in the original requiring a trial court to state whether the trial court believes an appeal is warranted.

C.S.H.B. 274 omits a provision included in the original that authorizes a prevailing party with respect to a claim, rather than a person, to recover attorney's fees from an individual, corporation, or other legal entity, rather than from an individual or corporation in addition to the amount of a valid claim and costs, if the claim is for certain specified items.

C.S.H.B. 274 contains provisions not included in the original amending provisions of the Civil Practice and Remedies Code relating to the definitions of terms in general provisions relating to settlement. The substitute omits provisions included in the original relating to a defendant's election to apply provisions relating to allocation of litigation costs to a civil action in which a claimant has asserted a claim against the defendant, including provisions relating to definitions, applicability of these provisions, the election, a revocation of an election, dismissal or nonsuit of action, award of litigation costs, liability of attorney, and the applicability of other law.

C.S.H.B. 274 contains provisions not included in the original repealing Sections 42.004(d) and (g), Civil Practice and Remedies Code. The substitute omits a severability provision included in the original. The substitute contains a provision not included in the original making its provisions effective on passage if it receives the necessary vote. The substitute differs from the original in nonsubstantive ways reflective of certain bill drafting conventions.

C.S.H.B. 274 82(R) 3

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By:AACreighton, Aliseda, Kleinschmidt, H.B.ANo.A274 AAAAAJackson, Sheets, et al.

A BILL TO BE ENTITLED

1 AN ACT 2 relating to the reform of certain remedies and procedures in civil 3 actions and family law matters. 4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 5 ARTICLE 1. EARLY DISMISSAL OF ACTIONS 6 SECTIONA1.01.AASection 22.004, Government Code, is amended 7 by adding Subsection (g) to read as follows: 8 (g)AAThe supreme court shall adopt rules to provide for the 9 dismissal of certain causes of action and defenses that the supreme 10 court determines should be disposed of as a matter of law on motion 11 and without evidence. Rules adopted under this subsection do not 12 apply to an action under the Family Code. 13 SECTIONA1.02.AAChapter 30, Civil Practice and Remedies Code, 14 is amended by adding Section 30.021 to read as follows: 15 Sec.A30.021.AAAWARD OF ATTORNEY ’S FEES IN RELATION TO 16 CERTAIN MOTIONS TO DISMISS. In a civil proceeding, on a trial 17 court ’s granting or denial, in whole or in part, of a motion to 18 dismiss filed under the rules adopted by the supreme court under 19 Section 22.004(g), Government Code, the court may award costs and 20 reasonable and necessary attorney ’s fees to the prevailing party 21 that the court determines are equitable and just. This section does 22 not apply to an action under the Family Code. 23 ARTICLE 2. EXPEDITED CIVIL ACTIONS 24 SECTIONA2.01.AASection 22.004, Government Code, is amended

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1 by adding Subsection (h) to read as follows: 2 (h)AAThe supreme court shall adopt rules to promote the 3 prompt, efficient, and cost-effective resolution of civil actions. 4 The rules shall apply to civil actions in district courts, county 5 courts at law, and statutory probate courts in which the amount in 6 controversy, inclusive of all claims for damages of any kind, 7 whether actual or exemplary, a penalty, attorney ’s fees, expenses, 8 costs, interest, or any other type of damage of any kind, does not 9 exceed $100,000. The rules shall address the need for lowering 10 discovery costs in these actions and the procedure for ensuring 11 that these actions will be expedited in the civil justice system. 12 The supreme court may not adopt rules under this subsection that 13 conflict with a provision of: 14 (1)AAChapter 74, Civil Practice and Remedies Code; 15 (2)AAthe Family Code; 16 (3)AAthe Property Code; or 17 (4)AAthe Tax Code. 18 ARTICLE 3. NO IMPLIED CAUSE OF ACTION 19 SECTIONA3.01.AASubchapter C, Chapter 311, Government Code, 20 is amended by adding Section 311.035 to read as follows: 21 Sec.A311.035.AANO IMPLIED CAUSE OF ACTION. A statute may not 22 be construed to create a cause of action unless the statute by clear 23 and unambiguous language creates a cause of action. This section 24 does not apply to an action under the Family Code. 25 ARTICLE 4. APPEAL OF CONTROLLING QUESTION OF LAW 26 SECTIONA4.01.AASection 51.014, Civil Practice and Remedies 27 Code, is amended by amending Subsections (d) and (e) and adding

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1 Subsection (f) to read as follows: 2 (d)AAOn a party ’s motion or on its own initiative, a trial 3 court in a civil action [A district court, county court at law, or 4 county court] may, by [issue a] written order, permit an appeal from 5 an order that is [for interlocutory appeal in a civil action] not 6 otherwise appealable [under this section] if: 7 (1)AA[the parties agree that] the order to be appealed 8 involves a controlling question of law as to which there is a 9 substantial ground for difference of opinion; and 10 (2)AAan immediate appeal from the order may materially 11 advance the ultimate termination of the litigation[; and 12 [(3)AAthe parties agree to the order]. 13 (e)AAAn appeal under Subsection (d) does not stay proceedings 14 in the trial court unless: 15 (1)AAthe parties agree to a stay; or 16 (2)AA[and] the trial or appellate court[, the court of 17 appeals, or a judge of the court of appeals] orders a stay of the 18 proceedings pending appeal. 19 (f)AAAn appellate court may accept an appeal permitted by 20 Subsection (d) if the appealing party, not later than the 15th day 21 after the date the trial court signs the order to be appealed, files 22 in the court of appeals having appellate jurisdiction over the 23 action an application for interlocutory appeal explaining why an 24 appeal is warranted under Subsection (d). If the court of appeals 25 accepts the appeal, the appeal is governed by the procedures in the 26 Texas Rules of Appellate Procedure for pursuing an accelerated 27 appeal. The date the court of appeals enters the order accepting

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1 the appeal starts the time applicable to filing the notice of 2 appeal. 3 SECTIONA4.02.AASection 22.225(d), Government Code, is 4 amended to read as follows: 5 (d)AAA petition for review is allowed to the supreme court 6 for an appeal from an interlocutory order described by Section 7 51.014(a)(3), (6), or (11), or (d), Civil Practice and Remedies 8 Code. 9 ARTICLE 5. RECOVERY OF ATTORNEY ’S FEES 10 SECTIONA5.01.AASection 38.001, Civil Practice and Remedies 11 Code, is amended to read as follows: 12 Sec.A38.001.AARECOVERY OF ATTORNEY ’S FEES. A person may 13 recover reasonable attorney ’s fees from an individual or 14 corporation, in addition to the amount of a valid claim and costs, 15 if the claim is for: 16 (1)AArendered services; 17 (2)AAperformed labor; 18 (3)AAfurnished material; 19 (4)AAfreight or express overcharges; 20 (5)AAlost or damaged freight or express; 21 (6)AAkilled or injured stock; 22 (7)AAa sworn account; or 23 (8)AAan appeal to the court under Section 11.43, Tax 24 Code, or an appeal to the court of a determination of an appraisal 25 review board on a motion filed under Section 11.45, Tax Code [an 26 oral or written contract]. 27 SECTIONA5.02.AAChapter 38, Civil Practice and Remedies Code,

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1 is amended by adding Section 38.0015 to read as follows: 2 Sec.A38.0015.AAORAL AND WRITTEN CONTRACTS. Unless otherwise 3 provided in a written contract, the prevailing party may recover 4 reasonable attorney ’s fees from an individual, corporation, or 5 other legal entity if the claim is for breach of an oral or written 6 contract. 7 SECTIONA5.03.AASection 38.002, Civil Practice and Remedies 8 Code, is amended to read as follows: 9 Sec.A38.002.AAPROCEDURE FOR RECOVERY OF ATTORNEY ’S FEES. To 10 recover attorney ’s fees under this chapter: 11 (1)AAthe person seeking to recover attorney ’s fees 12 [claimant] must be represented by an attorney; 13 (2)AAthe claimant must present the claim to the 14 opposing party or to a duly authorized agent of the opposing party; 15 and 16 (3)AApayment for the just amount owed, if any, must not 17 have been tendered before the expiration of the 30th day after the 18 claim is presented. 19 ARTICLE 6. ALLOCATION OF LITIGATION COSTS 20 SECTIONA6.01.AASections 42.001(5) and (6), Civil Practice 21 and Remedies Code, are amended to read as follows: 22 (5)AA"Litigation costs" means money actually spent and 23 obligations actually incurred that are directly related to the 24 action [case] in which a settlement offer is made. The term 25 includes: 26 (A)AAcourt costs; 27 (B)AAreasonable deposition costs;

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1 (C)AAreasonable fees for not more than two 2 testifying expert witnesses; and 3 (D)A[(C)]AAreasonable attorney ’s fees. 4 (6)AA"Settlement offer" means an offer to settle or 5 compromise a claim made in compliance with Section 42.003 [this 6 chapter]. 7 SECTIONA6.02.AASections 42.002(b), (d), and (e), Civil 8 Practice and Remedies Code, are amended to read as follows: 9 (b)AAThis chapter does not apply to: 10 (1)AAa class action; 11 (2)AAa shareholder ’s derivative action; 12 (3)AAan action by or against a governmental unit; 13 (4)AAan action brought under the Family Code; 14 (5)AAan action to collect workers ’ compensation 15 benefits under Subtitle A, Title 5, Labor Code; or 16 (6)AAan action filed in a justice of the peace court or 17 a small claims court. 18 (d)AAThis chapter does not limit or affect the ability of any 19 person to: 20 (1)AAmake an offer to settle or compromise a claim that 21 does not comply with Section 42.003 [this chapter]; or 22 (2)AAoffer to settle or compromise a claim in an action 23 to which this chapter does not apply. 24 (e)AAAn offer to settle or compromise that does not comply 25 with Section 42.003 [is not made under this chapter] or an offer to 26 settle or compromise made in an action to which this chapter does 27 not apply does not entitle any [the offering] party to recover

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1 litigation costs under this chapter. 2 SECTIONA6.03.AASection 42.003, Civil Practice and Remedies 3 Code, is amended to read as follows: 4 Sec.A42.003.AAMAKING SETTLEMENT OFFER. (a) After a 5 defendant files a declaration under Section 42.002(c), the 6 defendant filing the declaration and any party with a claim against 7 that defendant may make a settlement offer to settle all claims in 8 the action between the parties. 9 (b)AAA settlement offer must: 10 (1)AAbe in writing; 11 (2)AAstate that it is made under this chapter; 12 (3)AAstate the terms by which the claims may be settled; 13 (4)AAstate a deadline by which the settlement offer 14 must be accepted; and 15 (5)AAbe served on all parties to whom the settlement 16 offer is made. 17 (c)AAThe parties are not required to file a settlement offer 18 with the court. 19 SECTIONA6.04.AASection 42.004(c), Civil Practice and 20 Remedies Code, is amended to read as follows: 21 (c)AAThe litigation costs that may be recovered by the 22 offering party under this section are limited to those litigation 23 costs incurred by the offering party after the date the rejecting 24 party rejected the earliest settlement offer that entitles the 25 party to an award of litigation costs under this section. 26 SECTIONA6.05.AASections 42.004(d) and (g), Civil Practice 27 and Remedies Code, are repealed.

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1 ARTICLE 7. DESIGNATION OF RESPONSIBLE THIRD PARTIES 2 SECTIONA7.01.AASection 33.004(e), Civil Practice and 3 Remedies Code, is repealed. 4 ARTICLE 8. FAMILY LAW MATTERS 5 SECTIONA8.01.AATitle 6, Civil Practice and Remedies Code, is 6 amended by adding Chapter 148 to read as follows: 7 CHAPTER 148. APPLICATION OF FOREIGN LAWS; SELECTION OF FOREIGN 8 FORUM 9 Sec.A148.001.AADEFINITION. In this chapter, "foreign law" 10 means a law, rule, or legal code of a jurisdiction outside of the 11 states and territories of the United States. 12 Sec.A148.002.AADECISION BASED ON FOREIGN LAW. A ruling or 13 decision of a court, arbitrator, or administrative adjudicator on a 14 matter arising under the Family Code may not be based on a foreign 15 law if the application of that law would violate a right guaranteed 16 by the United States Constitution or the constitution or a statute 17 of this state. 18 Sec.A148.003.AACHOICE OF FOREIGN LAW OR FORUM IN CONTRACT. 19 (a) A contract provision providing that a foreign law is to govern 20 a dispute arising under the Family Code is void to the extent that 21 the application of the foreign law to the dispute would violate a 22 right guaranteed by the United States Constitution or the 23 constitution of this state. 24 (b)AAA contract provision providing that the forum to resolve 25 a dispute arising under the Family Code is located outside the 26 states and territories of the United States is void if the foreign 27 law that would be applied to the dispute in that forum would, as

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1 applied, violate a right guaranteed by the United States 2 Constitution or the constitution of this state. 3 SECTIONA8.02.AA(a) Section 148.002, Civil Practice and 4 Remedies Code, as added by this Act, applies only to a ruling or 5 decision that becomes final on or after the effective date of this 6 Act. A ruling or decision that becomes final before the effective 7 date of this Act and any appeal of that ruling or decision are 8 governed by the law in effect immediately before the effective date 9 of this Act, and that law is continued in effect for that purpose. 10 (b)AASection 148.003, Civil Practice and Remedies Code, as 11 added by this Act, applies only to a contract entered into on or 12 after the effective date of this Act. A contract entered into 13 before the effective date of this Act is governed by the law in 14 effect immediately before that date, and that law is continued in 15 effect for that purpose. 16 SECTIONA8.03.AAThis Act takes effect September 1, 2011. 17 ARTICLE 9. CONTESTED TAX APPRAISAL COSTS 18 SECTIONA9.01.AAIn an action contesting a tax appraisal a 19 taxpayer who prevails is entitled to an award of costs and 20 attorney ’s fees. If the appraisal district or taxing authority 21 prevails the appraisal district or taxing authority is not entitled 22 to costs and attorney ’s fees. 23 ARTICLE 10. EFFECTIVE DATE 24 SECTIONA10.01.AAThe changes in law made by this Act apply 25 only to a civil action commenced on or after the effective date of 26 the change in law as provided by this article. A civil action 27 commenced before the effective date of the change in law as provided

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1 by this article is governed by the law in effect immediately before 2 the effective date of the change in law, and that law is continued 3 in effect for that purpose. 4 SECTIONA10.02.AA(a) Except as provided by Subsection (b) of 5 this section: 6 (1)AAthis Act takes effect immediately if it receives a 7 vote of two-thirds of all the members elected to each house, as 8 provided by Section 39, Article III, Texas Constitution; and 9 (2)AAif this Act does not receive the vote necessary for 10 immediate effect, this Act takes effect September 1, 2011. 11 (b)AAArticles 4, 5, 6, and 7 of this Act take effect September 12 1, 2011.

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1 AN ACT 2 relating to the reform of certain remedies and procedures in civil 3 actions and family law matters. 4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 5 ARTICLE 1. EARLY DISMISSAL OF ACTIONS 6 SECTIONA1.01.AASection 22.004, Government Code, is amended 7 by adding Subsection (g) to read as follows: 8 (g)AAThe supreme court shall adopt rules to provide for the 9 dismissal of causes of action that have no basis in law or fact on 10 motion and without evidence. The rules shall provide that the 11 motion to dismiss shall be granted or denied within 45 days of the 12 filing of the motion to dismiss. The rules shall not apply to 13 actions under the Family Code. 14 SECTIONA1.02.AAChapter 30, Civil Practice and Remedies Code, 15 is amended by adding Section 30.021 to read as follows: 16 Sec.A30.021.AAAWARD OF ATTORNEY ’S FEES IN RELATION TO 17 CERTAIN MOTIONS TO DISMISS. In a civil proceeding, on a trial 18 court ’s granting or denial, in whole or in part, of a motion to 19 dismiss filed under the rules adopted by the supreme court under 20 Section 22.004(g), Government Code, the court shall award costs and 21 reasonable and necessary attorney ’s fees to the prevailing party. 22 This section does not apply to actions by or against the state, 23 other governmental entities, or public officials acting in their 24 official capacity or under color of law.

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1 ARTICLE 2. EXPEDITED CIVIL ACTIONS 2 SECTIONA2.01.AASection 22.004, Government Code, is amended 3 by adding Subsection (h) to read as follows: 4 (h)AAThe supreme court shall adopt rules to promote the 5 prompt, efficient, and cost-effective resolution of civil actions. 6 The rules shall apply to civil actions in district courts, county 7 courts at law, and statutory probate courts in which the amount in 8 controversy, inclusive of all claims for damages of any kind, 9 whether actual or exemplary, a penalty, attorney ’s fees, expenses, 10 costs, interest, or any other type of damage of any kind, does not 11 exceed $100,000. The rules shall address the need for lowering 12 discovery costs in these actions and the procedure for ensuring 13 that these actions will be expedited in the civil justice system. 14 The supreme court may not adopt rules under this subsection that 15 conflict with a provision of: 16 (1)AAChapter 74, Civil Practice and Remedies Code; 17 (2)AAthe Family Code; 18 (3)AAthe Property Code; or 19 (4)AAthe Tax Code. 20 ARTICLE 3. APPEAL OF CONTROLLING QUESTION OF LAW 21 SECTIONA3.01.AASection 51.014, Civil Practice and Remedies 22 Code, is amended by amending Subsections (d) and (e) and adding 23 Subsections (d-1) and (f) to read as follows: 24 (d)AAOn a party ’s motion or on its own initiative, a trial 25 court in a civil action [A district court, county court at law, or 26 county court] may, by [issue a] written order, permit an appeal from 27 an order that is [for interlocutory appeal in a civil action] not

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1 otherwise appealable [under this section] if: 2 (1)AA[the parties agree that] the order to be appealed 3 involves a controlling question of law as to which there is a 4 substantial ground for difference of opinion; and 5 (2)AAan immediate appeal from the order may materially 6 advance the ultimate termination of the litigation[; and 7 [(3)AAthe parties agree to the order]. 8 (d-1)AASubsection (d) does not apply to an action brought 9 under the Family Code. 10 (e)AAAn appeal under Subsection (d) does not stay proceedings 11 in the trial court unless: 12 (1)AAthe parties agree to a stay; or 13 (2)AA[and] the trial or appellate court[, the court of 14 appeals, or a judge of the court of appeals] orders a stay of the 15 proceedings pending appeal. 16 (f)AAAn appellate court may accept an appeal permitted by 17 Subsection (d) if the appealing party, not later than the 15th day 18 after the date the trial court signs the order to be appealed, files 19 in the court of appeals having appellate jurisdiction over the 20 action an application for interlocutory appeal explaining why an 21 appeal is warranted under Subsection (d). If the court of appeals 22 accepts the appeal, the appeal is governed by the procedures in the 23 Texas Rules of Appellate Procedure for pursuing an accelerated 24 appeal. The date the court of appeals enters the order accepting 25 the appeal starts the time applicable to filing the notice of 26 appeal. 27 SECTIONA3.02.AASection 22.225(d), Government Code, is

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1 amended to read as follows: 2 (d)AAA petition for review is allowed to the supreme court 3 for an appeal from an interlocutory order described by Section 4 51.014(a)(3), (6), or (11), or (d), Civil Practice and Remedies 5 Code. 6 ARTICLE 4. ALLOCATION OF LITIGATION COSTS 7 SECTIONA4.01.AASections 42.001(5) and (6), Civil Practice 8 and Remedies Code, are amended to read as follows: 9 (5)AA"Litigation costs" means money actually spent and 10 obligations actually incurred that are directly related to the 11 action [case] in which a settlement offer is made. The term 12 includes: 13 (A)AAcourt costs; 14 (B)AAreasonable deposition costs; 15 (C)AAreasonable fees for not more than two 16 testifying expert witnesses; and 17 (D)A[(C)]AAreasonable attorney ’s fees. 18 (6)AA"Settlement offer" means an offer to settle or 19 compromise a claim made in compliance with Section 42.003 [this 20 chapter]. 21 SECTIONA4.02.AASections 42.002(b), (d), and (e), Civil 22 Practice and Remedies Code, are amended to read as follows: 23 (b)AAThis chapter does not apply to: 24 (1)AAa class action; 25 (2)AAa shareholder ’s derivative action; 26 (3)AAan action by or against a governmental unit; 27 (4)AAan action brought under the Family Code;

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1 (5)AAan action to collect workers ’ compensation 2 benefits under Subtitle A, Title 5, Labor Code; or 3 (6)AAan action filed in a justice of the peace court or 4 a small claims court. 5 (d)AAThis chapter does not limit or affect the ability of any 6 person to: 7 (1)AAmake an offer to settle or compromise a claim that 8 does not comply with Section 42.003 [this chapter]; or 9 (2)AAoffer to settle or compromise a claim in an action 10 to which this chapter does not apply. 11 (e)AAAn offer to settle or compromise that does not comply 12 with Section 42.003 [is not made under this chapter] or an offer to 13 settle or compromise made in an action to which this chapter does 14 not apply does not entitle any [the offering] party to recover 15 litigation costs under this chapter. 16 SECTIONA4.03.AASection 42.003, Civil Practice and Remedies 17 Code, is amended to read as follows: 18 Sec.A42.003.AAMAKING SETTLEMENT OFFER. (a)AAA settlement 19 offer must: 20 (1)AAbe in writing; 21 (2)AAstate that it is made under this chapter; 22 (3)AAstate the terms by which the claims may be settled; 23 (4)AAstate a deadline by which the settlement offer 24 must be accepted; and 25 (5)AAbe served on all parties to whom the settlement 26 offer is made. 27 (b)AAThe parties are not required to file a settlement offer

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1 with the court. 2 SECTIONA4.04.AASection 42.004(d), Civil Practice and 3 Remedies Code, is amended to read as follows: 4 (d)AAThe litigation costs that may be awarded under this 5 chapter to any party may not be greater than the total amount that 6 the claimant recovers or would recover before adding an award of 7 litigation costs under this chapter in favor of the claimant or 8 subtracting as an offset an award of litigation costs under this 9 chapter in favor of the defendant [an amount computed by: 10 [(1)AAdetermining the sum of: 11 [(A)AA50 percent of the economic damages to be 12 awarded to the claimant in the judgment; 13 [(B)AA100 percent of the noneconomic damages to be 14 awarded to the claimant in the judgment; and 15 [(C)AA100 percent of the exemplary or additional 16 damages to be awarded to the claimant in the judgment; and 17 [(2)AAsubtracting from the amount determined under 18 Subdivision (1) the amount of any statutory or contractual liens in 19 connection with the occurrences or incidents giving rise to the 20 claim]. 21 ARTICLE 5. DESIGNATION OF RESPONSIBLE THIRD PARTIES 22 SECTIONA5.01.AASection 33.004, Civil Practice and Remedies 23 Code, is amended by adding Subsection (d) to read as follows: 24 (d)AAA defendant may not designate a person as a responsible 25 third party with respect to a claimant ’s cause of action after the 26 applicable limitations period on the cause of action has expired 27 with respect to the responsible third party if the defendant has

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1 failed to comply with its obligations, if any, to timely disclose 2 that the person may be designated as a responsible third party under 3 the Texas Rules of Civil Procedure. 4 SECTIONA5.02.AASection 33.004(e), Civil Practice and 5 Remedies Code, is repealed. 6 ARTICLE 6. EFFECTIVE DATE 7 SECTIONA6.01.AAThe changes in law made by this Act apply only 8 to a civil action commenced on or after the effective date of the 9 change in law as provided by this article. A civil action commenced 10 before the effective date of the change in law as provided by this 11 article is governed by the law in effect immediately before the 12 effective date of the change in law, and that law is continued in 13 effect for that purpose. 14 SECTIONA6.02.AAThis Act takes effect September 1, 2011.

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______________________________ ______________________________ AAAAPresident of the Senate Speaker of the HouseAAAAAA

I certify that H.B. No. 274 was passed by the House on May 9, 2011, by the following vote:AAYeas 96, Nays 49, 3 present, not voting; and that the House concurred in Senate amendments to H.B. No. 274 on MayA25, 2011, by the following vote:AAYeasA130, NaysA13, 2Apresent, not voting.

______________________________

Chief Clerk of the HouseAAA

I certify that H.B. No. 274 was passed by the Senate, with amendments, on MayA24, 2011, by the following vote:AAYeasA31, NaysA0.

______________________________

Secretary of the SenateAAA

APPROVED: __________________ AAAAAAAAAAAAAAAAADateAAAAAAA

AAAAAAAAA __________________ AAAAAAAAAAAAAAAGovernorAAAAAAA

Texas Legislature Online History

Bill: HB 274 Legislative Session: 82(R) Council Document: 82R 13370 CAE-F

Last Action: 05/30/2011 E Effective on 9/1/11

Caption Version: Enrolled Caption Text: Relating to the reform of certain remedies and procedures in civil actions and family law matters.

Author: Creighton | Aliseda | Kleinschmidt | Jackson, Jim | Sheets

Coauthor: Anderson, Charles "Doc" | Anderson, Rodney | Aycock | Beck | Berman | Bohac | Bonnen | Branch | Brown | Burkett | Button | Cain | Callegari | Carter | Chisum | Christian | Cook | Crownover | Darby | Davis, John | Davis, Sarah | Driver | Eissler | Elkins | Fletcher | Flynn | Frullo | Garza | Gonzales, Larry | Gooden | Hamilton | Hancock | Hardcastle | Harless | Harper-Brown | Hilderbran | Hopson | Howard, Charlie | Huberty | Isaac | Keffer | King, Phil | King, Susan | Kolkhorst | Kuempel | Landtroop | Larson | Laubenberg | Lavender | Legler | Lyne | Madden | Margo | Miller, Doug | Miller, Sid | Morrison | Murphy | Nash | Orr | Otto | Parker | Patrick, Diane | Paxton | Pena | Perry | Pitts | Price | Schwertner | Scott | Shelton | Simpson | Smith, Todd | Smith, Wayne | Taylor, Larry | Taylor, Van | Torres | Truitt | Weber | White | Woolley | Workman | Zedler | Zerwas

Sponsor: Huffman

Subjects: Civil Remedies & Liabilities (I0065)

Courts--Civil Procedure (I0135)

Tort Reform (I0816)

ATTORNEY'S FEES (S0202)

SUPREME COURT (V0311)

House Committee: Judiciary & Civil Jurisprudence Bill Subcommittee: Torts Status: Out of committee Madden (Chair) | Davis, Sarah | Lewis Vote: Ayes=7 Nays=1 Present Not Voting=0 Absent=3

Senate Committee: State Affairs Status: Out of committee Vote: Ayes=9 Nays=0 Present Not Voting=0 Absent=0

Actions: (descending date order) Viewing Votes: Most Recent House Vote | Most Recent Senate Vote Time Journal

Description Comment Date Page

E Effective on 9/1/11 05/30/2011 E Signed by the Governor 05/30/2011 6917 E Sent to the Governor 05/27/2011 6459 S Signed in the Senate 05/27/2011 4373 H Signed in the House 05/27/2011 6275 07:45

874

H Reported enrolled 05/27/2011 6459 AM

S House concurs in Senate amendment(s)- 05/25/2011 3715 reported H Text of Senate Amendment(s) 05/25/2011 5704 H Statement(s) of vote recorded in Journal 05/25/2011 5704 H Record vote RV#1504 05/25/2011 5704 H House concurs in Senate amendment(s) 05/25/2011 5704 06:44

H Senate Amendments Analysis distributed 05/24/2011 PM

06:43

H Senate Amendments distributed 05/24/2011 PM

H Senate passage as amended reported 05/24/2011 5390 S Record vote 05/24/2011 3373 S Passed 05/24/2011 3373 S Read 3rd time 05/24/2011 3373 S Record vote 05/24/2011 3373 S Three day rule suspended 05/24/2011 3373 S Vote recorded in Journal 05/24/2011 3373 S Read 2nd time & passed to 3rd reading 05/24/2011 3373 S Record vote 05/24/2011 3373 S Rules suspended-Regular order of business 05/24/2011 3373 S Placed on intent calendar 05/24/2011 11:14

S Committee report printed and distributed 05/23/2011 AM

S Reported favorably as substituted 05/23/2011 3319 S Testimony taken in committee 05/21/2011 S Considered in public hearing 05/21/2011 S Left pending in committee 05/16/2011 S Testimony taken in committee 05/16/2011 S Considered in public hearing 05/16/2011 S Scheduled for public hearing on . . . 05/16/2011 S Referred to State Affairs 05/10/2011 2188 S Read first time 05/10/2011 2188 S Received from the House 05/10/2011 2156 07:50

H Reported engrossed 05/10/2011 3652 AM

H Reason for vote recorded in Journal 05/09/2011 3221 H Statement(s) of vote recorded in Journal 05/09/2011 3221 H Record vote RV#857 05/09/2011 3220 H Passed as amended 05/09/2011 3220 H Record vote RV#856 05/09/2011 3220 H Amendment tabled 11-Dutton 05/09/2011 3220 H Record vote RV#855 05/09/2011 3219 H Amendment tabled 10-Dutton 05/09/2011 3219 H Record vote RV#854 05/09/2011 3218 H Amendment tabled 9-Dutton 05/09/2011 3218 H Amended 4-Lucio 05/09/2011 3218 H Vote reconsidered 05/09/2011 3218 H Statement(s) of vote recorded in Journal 05/09/2011 3217 H Record vote RV#853 05/09/2011 3217 H Amendment adopted as amended 7-Gutierrez 05/09/2011 3217 H Record vote RV#852 05/09/2011 875 3216

H Motion to table fails 7-Gutierrez 05/09/2011 3216 H Amendment amended 8-Gutierrez 05/09/2011 3216 H Amendment(s) offered 7-Gutierrez 05/09/2011 3216 H Statement(s) of vote recorded in Journal 05/09/2011 3215 H Record vote RV#851 05/09/2011 3215 H Amended 6-Hilderbran 05/09/2011 3214 H Statement(s) of vote recorded in Journal 05/09/2011 3214 H Record vote RV#850 05/09/2011 3213 H Amended 5-Lewis 05/09/2011 3213 H Statement(s) of vote recorded in Journal 05/09/2011 3213 H Record vote RV#849 05/09/2011 3212 H Amendment tabled 4-Lucio 05/09/2011 3212 H Amendment withdrawn 3-Eiland 05/09/2011 3212 H Amendment adopted as amended 1-Creighton 05/09/2011 3211 H Statement of Leg. Intent Recorded in Journal 05/09/2011 3209 H Amendment amended 2-Creighton 05/09/2011 3209 H Amendment(s) offered 1-Creighton 05/09/2011 3209 H Statement of Leg. Intent Recorded in Journal 05/09/2011 3206 H Read 3rd time 05/09/2011 3206 H Statement(s) of vote recorded in Journal 05/07/2011 3200 H Record vote RV#847 05/07/2011 3200 H Passed to engrossment 05/07/2011 3200 H Statement(s) of vote recorded in Journal 05/07/2011 3199 H Record vote RV#846 05/07/2011 3199 H Motion prevails 05/07/2011 3199 H Motion for the previous question 05/07/2011 3199 H Statement(s) of vote recorded in Journal 05/07/2011 3198 H Record vote RV#844 05/07/2011 3197 H Motion to suspend rules 05/07/2011 3197 Rule 6, Section 6 and Rule 13, H Point of order overruled 05/07/2011 3197 Section 1

H Read 2nd time 05/07/2011 3197 H Placed on Emergency Calendar 05/07/2011 H Considered in Calendars 05/06/2011 H Committee report sent to Calendars 05/05/2011 11:09

H Committee report distributed 05/05/2011 PM

H Comte report filed with Committee Coordinator 05/05/2011 3178 H Reported favorably as substituted 05/05/2011 H Committee substitute considered in committee 05/05/2011 H Considered in formal meeting 05/05/2011 H Returned to committee 05/05/2011 3073 H Point of order sustained Rule 4, Section 32(b)(9) 05/05/2011 3073 H Point of order overruled Rule 4, Section 32(b) 05/05/2011 3073 H Read 2nd time 05/05/2011 3073 H Placed on Major State Calendar 05/05/2011 H Considered in Calendars 05/02/2011 H Committee report sent to Calendars 04/27/2011 05:38

H Committee report distributed 04/26/2011 PM 876

H Comte report filed with Committee Coordinator 04/26/2011 2324

877

H Reported favorably as substituted 04/14/2011 H Committee substitute considered in committee 04/14/2011 H Recalled from subcommittee 04/14/2011 H Considered in formal meeting 04/14/2011 H Subcommittee members named 04/11/2011 H Referred to subcommittee 04/11/2011 H Committee substitute considered in committee 04/11/2011 H Recalled from subcommittee 04/11/2011 H Considered in public hearing 04/11/2011 H Scheduled for public hearing on . . . 04/11/2011 H Left pending in subcommittee 04/06/2011 Testimony taken/registration(s) recorded in H 04/06/2011 subcommittee H Considered by s/c in public hearing 04/06/2011 H Scheduled for public hearing in s/c on . . . 04/06/2011 H Posting rule suspended 04/05/2011 1488 H Subcommittee members named 04/04/2011 H Referred directly to subcommittee by chair 04/04/2011 H Referred to Judiciary & Civil Jurisprudence 03/14/2011 777 H Read first time 03/14/2011 777 H Filed 03/10/2011